Shadow Chancellor Ed Balls has called on the Government to listen to the “wise advice” offered by the OECD which today warned the pace of fiscal consolidation may need to be slowed if growth continues to be weak.
In an interview with the Times, Organisation for Economic Cooperation and Development deputy secretary general Carlo Padoan announced a shift in the think tank’s position on the Government’s austerity drive, which it had previously enthusiastically backed.
Balls says: “It is time George Osborne listened to wise advice, looked at what is happening to the economy and thought again about the speed and scale of cuts.”
Podoan told the Times: “We see merit in slowing the pace of fiscal consolidation if there is no good news on the growth front. We have seen that [growth numbers] are a bit weaker than expected; should that continue to be the case, there is scope for slowing the pace.”
Senior members of the Government have previously rejected Labour’s calls for the pace of cuts to be slowed, using the backing of groups like the OECD as evidence it is doing the right thing.
In March the OECD’s secretary general Angel Gurria stood alongside Osborne and said when facing a GDP budget deficit of 10 per cent it was vital to move “very fast, very decisively and let everyone know – leave them in no doubt whatsoever – what is your intention”, calling on the UK to “stay the course” on deficit reduction.
In February the Institute for Fiscal Studies called on Osborne to have a publicly-disclosed plan B enabling him to rebalance how much of the consolidation is delivered through tax changes and spending cuts.
Balls says: “We know the Government’s most senior civil servants have drawn up a plan B, which ministers hastily rejected. George Osborne’s rigid determination, despite all the evidence, to stick with the deep and fast cuts and refusal to even consider a plan B does not boost his credibility, it undermines it.”